Reflections on rent policy for social housing providers after 2025

April 2023. At the recent NHF Housing Finance Conference, an informative and reflective discussion took place on the direction rent policy for social housing providers in England might take after 2025 when the current settlement ends.

It seems likely that a decision will be taken some time this year by the current Secretary of State, which presents the slightly unusual situation of a key policy decision for the sector being taken ahead of a likely General Election, prior to its implementation by an as yet unknown government.

Reflecting on the current settlement for Registered Providers in England for 2023/24 of 7%, the RSH was firmly of the view this was a good result for the sector, despite it being a real terms cut, given the current level of inflation. Our discussions with the sector suggest this was a better-than-expected outcome for many.

For anyone who has tried to explain the basis on which social rents are currently set in England will know, the current policy framework is often incoherent to tenants. The RSH reflected that this is the result of government trying to achieve too many different and sometimes competing policy objectives through social rent policy.  The DWP will want to manage its risk and exposure to Universal Credit and Housing Benefit costs, whereas the Treasury sees it as the main tool for funding new supply and investment in existing stock, with the Department for Levelling Up, Housing & Communities trying to balance these priorities with its wider objectives around tenant engagement and service quality, stemming from the Charter for Social Housing Residents. Balancing such a complex range of priorities involves lots of trade-offs and given the relatively short timeframe to the next general election, the Regulator’s expectation was one of likely small changes to the existing rent setting framework, rather than anything more radical in the immediate future.  The RSH’s view was that this area of policy will need the sector to deeply engage in 2-3 years of detailed policy discussions on a cross-party basis, and to think through potentially unintended consequences.

There have been calls from some parts of the social housing sector for greater freedom in setting rent policy at individual Registered Provider level. Perhaps unsurprisingly, the RSH cautioned there were hazards and potentially unintended consequences of this approach. Other calls from individual RPs included:

  • Individual RP Boards being best placed to determine the distribution of the overall rent settlement across their stock to best address affordability challenges with investment need.
  • A desire for a longer-term settlement, perhaps ten years to provide longer term certainly.
  • Broad agreement on more consultation, discussion and explanation with residents is needed.
  • A challenge over where there was sufficient focus on affordability and whether the current debate is too provider-focussed.

After all of this, the RSH raised the issue over whether future rent policy can be guaranteed to be adhered to at all, given that both previous settlements have been subsequently changed or overruled by Government at different times.

Rent policy continues to be a challenge for the sector. Adherence to the RSH’s Rent Standard 2023 continues to be an essential area that Boards need sufficient assurance that their organisations understand and meet the Standard’s requirements and expectations.

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